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tv   Worldwide Exchange  CNBC  November 27, 2012 4:00am-6:00am EST

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. welcome to worldwide exchange. these are your headlineses from around the world. european markets cheer a ground breaking deal for greece, they agree to reduce debt levels, cut interest rates and extend the maturity of existing loans. mark carney prepares to take up the reigns of the uk economy any. unlikely to be any good news. third quarter gd figures expected to be revised down. and it's point, click, buy. americans were doing plenty of that yesterdays as early reports suggest online holiday sales soared on cyber monday. and all bets are off. prediction market entrade says
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it can no longer accept u.s. customers as market regulators say its trades aren't legal. shanghai composite closed below 2,000 for the first time in three years. it comes at a time when plenty have been talking up chinese growth prospects for next year. so we'll get into that more later. but 1991 is the closing level. this the main one to watch across asia. the nikkei did manage to continue it rally adding about 0.4% as the yen weakens on comments this morning. forex, the dollar-yen one to watch, 82.19 is the level there.
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the aussie dollar doing a little bit abouter despite that weak number on the shanghai composite. sterling is flat. we'll get into that more later. and euro-dollar just barely higher today, we did see it rallying over the 1.30 mark last night. as we look at crude rallying adding a third of a percent. brent about a quarter of a percent. copper, we're adding 0.2%. 354 bucks on that contract. the real foe you can as we continue to examine whether china's economy is fundamentally hanging in there, concerns about the chinese copper inventories are growing. i believe it's something like china copper weak, so we should see plenty of headlines in the days to come. let's see how european bourses are doing so far in the trading session. ibex 35 adding 0.4% about, of course the rally spurred by some
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agreement as to greek debt relief. cac 40, 7339. p ftse hanging in there. we'll hear from mervyn king giving the inflation report if he makes any comments about the uk economy we'll bring these it to you. the greek debt deal is done. ire h. ire row zone finance ministers agreed terms athenss will receive its much needed bailout cash. >> reaching a level substantially lower than 110% of gdp.
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>> for more we're going out to sylvilvia for more there brusse. is this the beginning of the end? >> i wouldn't put the word he said in it by any means. it's one step further along the road. a sigh of relief definitely. first of all, there was a great fear and trepidation that we might walk out of this again and say we're almost there, but not quite there. we'll meet again next week, but the deal is it on the table. i think what made it so complicated was this kind of different scenarios that we're trying to play out in order to get the imf on board. i think that was the sticking point from the end because the
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euro group had kind of reached common ground in the phone conference call, they had over the weekend, so it was so it was convincing to give more time. that's what happened. we have a combination of measures. in the early hours of the morning, he said this is not only about money, this is also about putting greece and the whole eurozone on a more sure footing. and i think he's quite right there. this is not only about money, this is about sort of restructuring, reprofiling i think is probably the best word for it of greek debt. p what have we got? first of all, step one is the greek buy back, debt buy back program by the greek government. that has to be put on the road. then all the the other little ducks will come into a row, lowering of the interest rate, a lot more than what was actually speculated about earlier on.
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and stretching of greek debt up to 15 years and small are components in there that help greece along that road. so certainly more than the approach before, but not the he said of the world because if the eurozone economy is including the greek economy keeps slip sliding away, then all these parameters will not fit anymore about that but as i said, great sigh of relief, both from the imf and of course the greek finance minister. and he had this to say. >> it will help greece because it keeps it in the euro. we avoid insolvency. so now we have time to feel more positively about growth, about
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the social state, about also how to implement the difficult decisions we have taken. >> but they haven't got the money yet. what jean claude said is they hope the check will be signed for at least $31.4 billion before the the next summit on december the 13th and then the last chunk will be paid out sumply 10 billion in various stages throughout the first quarter. if of course the greeks keep complying to whatever they promised. >> silvia, many thanks for that. so many detailses to walk through and the dates still matter. i believe the german vote will be november 29th. silvia, back with her in a little bit next hour. first, though, we want to get a read from james ferguson. ross isn't here unfortunately, but it's a big morning and i
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just want to know what we've solved today and what still remains to be done. >> one of the big problems with any country in debt is that although it's running a primary deficit, actual servicing makes if worse. so one thing you can do is take away some of the debt burden to enable them to try to get the economy back into some sort of primary surface situation. but imagine we have a baby crawling across the floor and it keeps crawling away from us. we're picking up up the baby and bringing it back closer to us, but it's still crawling. so as soon as you put it down, it's heads off back where it came from. so the real problem with greece, they say the good news is we'll stay in the euro. really? the problem for greece is that greece in the euro appears to be uncompetitive. you either come out of the euro, and you have big significant
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drop in the value of your currency so everything that you do, no one would seem there is much change in import costs, but suddenly everything in greece is more than competitive. but if you stay, instead of the currency dropping 0%, every person's salary has dropped 30%. so this gets much, much harder. >> it's clear the internal devaluation is much more difficult, but also that it has been happening in greece. p what's your take on this? ich heard t i've heard the argument about the internal devaluation which is extremely difficult and results in the break down of the social cohesion. p are they making enough progress in your view, will they continue to make enough progress in your view to come out of it more competitive? >> obviously the pressures start at once, so things do get more competitive, but that's another
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way of saying things are getting really unpleasant. a better analogy really is ireland is where the process is enfurther advanced p. and it does look competitive and does have a chance to trade its way out of trushl. the problem then is the fact that this is systemic, this is across the world. and particularly within europe, if your main trading partner is europe, europe is not a great market to be trying to sell into even if you got more competitive. >> i wanted to ask briefly just about precedent because obviously this case isn't just as important for greece. we could have solved the greek problem with a couple billion dollars here and there. it's really about setting a press accident for dealing with the rest of the eurozone. so what does this deal imply for spain, for italy, for ireland? >> the irish have been the really stand up guys throughout this whole process. they've gone in first, taken their lumps and got themselves quite competitive. they're not going to be turning around and saying you're kind of bailing out the greeks. what about taking some pressure
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off us? we have a massive debt burden, we really need some compensation here, as well. but it's worth taking a step back even from that and saying the germans and other surface running countries in europe always did have the opportunity to bail out the deficit countries, but almost the obligation. that's what happens if you create a united states of europe. just like alabama was bailed out by new york state or whatever it is. >> i think you were struggling to find a strong state there for a second. >> was a little bit. so the actual transfers aren't necessarily the problem. the problems are two fold. the first as you alluded to is the internal competitiveness of particularly the peripheral countries. when they joined the euro, they took advantage of the low borrowing costs to borrow and spend up a storm, public sector wages went up. and they become dramatically uncompetitive. and the easy way is to leave the euro. the painful way is to stay.
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so the other thing to bear in mind is the banks. banks in europe are only just beginning to try to deal with the balance sheet repair that comes from the contraction area phase and that's a bigger problem really than the national. >> and we haven't entaven talke about france yet. but he'll stay can us. osbourne reveals carney as the next head of the bank of england. press reports suggest the eu is set to approve hutchinson as purchase of orange austria. we'll take a look at the competitive landscape in the telecom industry and what it means for consumers. also can the u.s. housing market continue along the long an winding road to recovery? we'll cross over to new york for analysis ahead of today's case shiller index. and some investors are make money out of art. . we'll speak with a columbian artist about making a political
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statement using bank notes.
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bank of canada governor mark carney says he's honored to
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accept the role as head of the bank of england. george osbourne made the announcement in parliament describing carney, who is also head of the financial stability board, as the outstanding banker of his generation. >> i can tell parliament and the public that the next governor of the bank of england is to be mark carney. he's currently governor of the central bank of canada and chair of the world's financial stability board. he is the best, most experienced and most qualified person in the world it to be the next governor of england. >> most qualified person in the world. pretty high praise. carney will also serve a five year term instead of the advertised eight years. he's admitted there's much work to do when he replaces mervyn king who will retire in july of next year. >> this is a major challenge. it's a major opportunity, very important for the global economy that the uk does well, that it succeeds in this rebalancing of their economy, that the reform of the british financial system
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is completed, it's well advanced, but it needs to be completed. >> for more on what this will mean on market, joining us is adam cole, head of current strategy here at rbc and still with us here onset, james ferguson. adam, first out to you. mark carney perceived as slightly more hawkish at least in his tenure at the bank of canada. so a net positive for sterling? >> marginally so, but i think there are offsets. firstly i would say i don't think it's a game changing yet at least for sterling. bear in mind that we have two full quarters of activity to come before carney actually takes up that position and a huge amount of uncertainty on how the economy will generally perform over that period. for me that uncertainty really dominates the uncertainty associated with policy. but also bear in mind market's immediate reaction was that financial regulation if anything will be tighter under carney than with the case previously. and if that results in any
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perform afternoons the uk financial stocks, that's associated with sterling underperformance. i don't think it's quite as clear cut as maybe the immediate reaction. i think there are offsets to that. >> i think the big risk, because art carney was the best name on on the list, he seemed to take himself off the list and then suddenly reappeared. and that has to be a good thing. however, there are a couple worries about mark carney. only a couple. the biggest worry for me is that, yes, he oversaw a financial system that didn't crash and he oversaw that because it was a very conservative financial. that doesn't mean he understands exactly what the other systems have been going through. you really need to be at the sharp end to pick that up. so one of the problems is that he'll come possibly with a
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complacency that the other central bankers exhibited before the crisis. >> won't you precisely because of the perception that he hasn't gone through come with a more proactive approach? >> hopefully, but his number two is the man that he picked for the job, so there may be communique or trust issues between the two of them. i to wonder if this means because when we look at the composition for the federal reserve, we see it getting more dovish. what about the bank of england, does it sway it towards being more hawkish maybe because of some of the concerns with how he gets along with paul tucker or just perhaps given more voice to some of the others on the board? >> i think the immediate effect is unlikely to be a revolution in the way policy is made in the uk.
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he's one of nine voices. and i think 2 g1/2 years of experience, markets must have learned from experience that beyond actually the kind of policy tools being used really don't have much identifiable him pact. so the debate over whether policy easing comes through or policy commitments for me marginal. good is it just not because the policy has been aggressive enough? because it seems extraordinary to say doesn't have any impact. >> partly qu operates through forward rate expectations. they're now so flat that it's hard to manipulate them lower when there is so little in the curve anyway. that wasn't the case in the early stages, but every time the bank uses that, it becomes
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slightly less effective. so i think the debate is somewhat margin all for the occurrences city. >> do you agree in terms of the marginal impact? >> i do understand where the argument comes from.frankly is of the currency. the problem is two fold. one, we haven't got a counter factual. we sort of have. look at ireland. but without that very dramatic counter factual, it looks like qe is not doing anything. i would argue it's successful at neutralizing the deflationary contraction. but it's hard to read. we have so many other countries doing qe or sending messages about whether they'll stop or accelerate or slow down or might do it that actually looking at currencies that are all relative, it's hard to read
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this. what we can see is that the dollar was under an stream amount of delusionary pressure during the qe experience with the exceptions where it spiked up during actual panic. the really interesting thing about the euro is the hur row hasn't fallen that much given the fact it's dominated the bad news. and that i would say is because they haven't done the dilution of qe yet. so it's held its own against the dollar and sterling because they were doing qe. the really interesting thing is as the uk and u.s. qe programs mature, the euro has to actually maybe start doing it, then suddenly -- >> does that finally weaken. >> we could have a dramatic impact on the euro. so i think the thing to watch for is the yen and the euro, how they might dramatically change course over the next 12 months
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or so. >> we'll leave it there. adam and james will stay with us. we want to know what you think of mark carney's appointment. who would you have picked for the job? join the conversation. @cnbcwex. and even though he's not here, you can still defe defeat @rosswestgate, maybe send him? well wishes as he recovers from being a little under the weather. richard fisher says the u.s. center bank must soon decide when to end accommodative monetary policy. speaking in berlin, fisher warns the fed is fast approaching the point of defining limits of monetary policy. and that the size of the fed asset purchases is abnormal. meanwhile the white house says president obama called house speaker john boehner and harry reid this weekend for avoid efforts on fiscal cliff. on wednesday president obama will seek more input from top
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ceos, including gold man's lloyd blankfein and caterpillar's doug owner hill man. a number will travel to washington to try to reach a deficit cutting deal as part of the fix the debt campaign. so all things fiscal cliff still pre-dominate. we have a time clock that's quickly running out. how important is it that we get an agreement before the end of the year? >> this is like the debt ceiling argument. people got into a panic. that's something we even imposed on ourselves to decide that the debt shouldn't go too high. so it's not a bad thing. same with the fiscal cliff. what are we saying with the fiscal cliff? we're saying the economy might be revealed to be what it's actually doing because we'll take away the artificial supports because we think it's held any enough now to maybe after itself. that might entail a step drop because at the moment we're giving these tax breaks, but we're doing it out of our saving. >> but the point isn't just that we have to restore a higher
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level perhaps of taxes and lower level of spending than we might like. the problem with the u.s. is it gets into that ideological dispute over whether the way to do that should be by cutting spending and raising taxes. so there is an actual sort of fundamental disagreement that underpins this sense of knee jerk -- >> why have we had to do this? we've had to borrow money and cut people 00 taxes and spend more on social services because the underlying private sector economy completely ran out of steam. it ran out of steam because it needs the banking system to feed off. it needs access to trade credit, to business finance, et cetera. and so when the banking system suddenly said we've got another imperative for us the next few year, we'll have to rebuild our balance sheets, the private sector is temply cut off and drifts. so the public sector has to step in. so what we're really discussing is the private sector sufficiently robust that the public sector can step back and let that take over.
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that's still debatable, but we've had bank lending increase now for 18 months. hasn't been increasing anywhere else in the western world. so after 18 months, admittedly all the loans have gone to the corporate sector and the corporate sector tends to use debt only to buy back shares. but at least it's starting to -- house market is start to go recover. it looks promising. sgr the trouble, though, is if you take it away, there will be weakness. we don't even have time to get into it, but a bit of a circular debate that appears as though the economy isn't quite ready to handle the full impact of this just yet. >> we've got the patience sot o life support system. he's woken up and we're about to pull the plug which is a little hasty. so we're all nervous about what happens. but frankly the background in america, while not spectacular, looks pretty solid. and frankly, qe on top of increased bank lending looks like a very stim ier to environ.
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we'll bring you the second estimate for third quarter gdp in four minutes. i always wait until the last minute. can i still ship a gift in time for christmas? yeah, sure you can. great. where's your gift? uh... whew. [ male announcer ] break from the holiday stress. ship fedex express by december 22nd for christmas delivery.
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canadian mark carney will take up the reins of the uk
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economy, but unlikely to be much good news today as third quarter gdp figures cross any second now. and point, click, buy. americans doing a lot of that yesterday as early reports suggest online holiday sales soared on cyber monday. and all bets are off. prediction market entrade says it can no longer accept u.s. customers as market regulators say its trades aren't legal. we've been waiting the second read of third quarter uk. up changed at 1% quarter on quarter. actually better than expected because there was some idea that perhaps they would be revised down, but let's get adam cole's take on this. the sterling a little weaker against the dollar. 1% quarter on quarter unchanged. what's your take?
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>> it really doesn't change the outlook materially. we know the data through the summer were badly distorted by a number of special effects. and i think realistically you need to look at q2 and q3 together. but equally i'd say as we head into the final month of q4 what happened to the third quarter now really is rather historical. so what markets will take more direction from is the higher frequency indicators as they build a picture for growth in q4. and that looks okay if unspectacular at the moment. >> is okay a fair assessment? because it feels as though we've gotten a lot of negative news since the surprisingly strong print on on third quarter gdp. >> it's true simple balance of data has been generally weak than expected, but longer term if i look at the dynamic growth expectations in the uk, economists stopped revising down their 2013 growth forecasts a couple months ago and the trend has actually been for 2012 growth forecast to be revised p over the last couple months. so i think generally
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expectations at least you you can say have stopped deteriorating for the uk. >> we should note that even though the quarter to quarter pace was unchanged, on a year on year basis, the gdp figures instead of being flat now show a decline of 1/10 of a percent. so clearly not a good sign if the economy is actually smaller in the third quarter this year than it was a year earlier. >> no, and that will at the margin leave more capacity than previously thought. i'd say a small change to the figures for the third quarter is noting for to materially change the outlook for policy as we head into the tail end of the fourth quarter. >> and what is that outlook in your view? >> we think policy for some considerable time now is on hold. clearly highly contingent on how the activity data pan out for q4 in the early part of 201. but base case is the easing of policy in the uk is essentially now done and we're on hold for
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some months. >> and we'll see how mark carney deals with what he inherits. adam coles, thanks for all your time this morning. let's take a quick look at how european markets are responding to this data and the news overnight that its lenders have reached a deal with regards to greece. for the most part still a positive rally across the board adding half a percent for the ftse, about 0.6% in germany and france and ibex about 0.4%. bond space more clearly shows rotation that we're seeing out of bounds and gilts and into the core where those arrow indicates what yields are doing. and a quick look at forex, euro-dollar did hit 1.30 on that news last night. off a little bit this morning. 1.2963. we're also keeping an eye on the dollar yen which is add building a tenth of a percent to a level of just over 82. a couple of top stories we're watching this morning.
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u.s. consumers may have built up calluses on on their index fingers with all the pointing, clicking and touch screen shopping they did on on cyber monday. ibm smarter commerce says as of 9:00 p.m. eastern, sales at 5 oof the top retail websites were up 28% year on year. sales from smartphones and tablets were up 10% and pay pal say triple the mobile payment volume as of monday an than a year earlier. so those who say cyber monday is nothing but a marketing employ, apparently people really are shopping that day. entrade is telling u.s. customers they must close their accounts by december 31st. this move comes hours after the commodity futures trading commission filed charges against the irish company which gained popularity for online contracts or bets on daily events like the u.s. presidential election. the cftc is saying entrade has illegally facilitated bets on future economic data, gold prices and even acts of war.
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the agency says they're option and can only be traded on regulated exchanges. lehman brothers has striked a deal to sell arch stone to equity residential for just over $6 billion. arch stone owns 45,000 apartment units and the sale closes a rocky five year chapter for lehman which took the company private in 2007 only to see its value plumb met when the u.s. housing market collapsed. auditors now say arch stone was a major contributor to lehman's dehe miz. moodys is sticking with a stable outlook for india. the agency mentioned a list of positives including india's high savings and investment rates, large diverse economy, but moody's did warn of credit challenges posed by india's weak
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infrastructure, high government debt and inflation. also under pressure partly due you to the country's strong reliance on imported crude. india is the world's fourthimpo may be some relief in sight. cnbc has more on the story live from new delhi. >> so this is a really big asset when talking about the field. field one will be producing 400,000 barrels a day. phase two producing 1 million barrels of oil every day. and conoco phillips announced an agreement for the $5 billion deal, but i would like to point out this deal is far from done. there are plenty of consortium partners when you're talking
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about it. for example shell, exxonmobile, all holding a a little over 16%. it will require all consortium partners. become when bp wanted to exit, in the end actually bought the stake, so we'll have to perhaps see a lot of work being done by conoco phillips to convince the partners to allow the deal to go through. 24r have been plenty reports in the past you how companies want to increase their stake when it comes to these oilfields. i did speak with the chairman of the oil and natural gas corporation, he's hopeful he will get the regulatory approvals and be able to close the deal by the first half of 2013. interestingly, it's in the first half of 2013 that we'll see oil being produced. >> thanks very much for that.
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now, in japan, the economy has become a hot button topic ahead of the country's december 16th election. on that spgs ldp leader kept up his rhetoric warning japan will not be able to recover unless it gets rid of deflation. he stuck by his previous call saying the boj has to ramp up its inflation target from 1% to 2%. boj chief says his goal sun realistic. meanwhile the ruling dpj issued its manifesto today vowing to continue putting pressure on the central bank to maintain its easing stance. and in the meantime, japan's shipping industry is facing rough waters as global demand falters. more now from the nikkei. >> the nikkei has reported that shipping for the osk lines, the company with the world's biggest shipping fleet, will cut to 940 from 981. shipping fees have been dropping
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due to the global economic slowdown. the firm plans to cut unprofitable runs. and it will scrap large vessels and sell some tankers. last year it lowered its earnings projection and said it expects a net loss of $290 million for the year through march 2013. other rivals in the mobile shipping sector are also considering reducing their fleets. it will sell 28 vessels and ten large carriers. back to you, kelly. >> thanks very much. and now over to austria who the bwb is expected to hold a meeting with other eu regulators in brussels today. according to reports, the discussion will center on whether or not hutchinson 3g austria, which is a unit of hong kong, will get the go ahead for its $1.7 billion takeover of local rival orange. analysts say there are concerns the acquisition will result in higher prices for consumers. for more, senior director for
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ict practice asia at frost and sullivan. what are the broader sort of implications for this deal and whether it goes forward? >> fundamentally telecom service industry is a bit dynamic. profitability is closely associated with market share. so you're seeing even if the markets of asia, service providers are trying to increase their market share and the easiest way or fastest way is by acquiring one of the players. and that's what they're doing here. the challenge for hutch is because the constraints is that leaves the number of operator for three. which is a bit of a concern it for regulators in terms of how it will lead to overall effect on on pricing. and that's why i think they're take ir that own sweet time in terms of giving the green light to this particular merger.
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>> this may sound naive, but why is it the case that each country potentially should have two, three, more than that in terms of local providers? is there not a way of putting it in the broader context of the european region? >> more than three operators we're seeing over a period of time they face profitability challenges. so three to four seems more reasonable. and the main concern is that pricing. how it will impact the consumers in the long run. they want to make sure the merger does not lead to an increase in service pricing. >> and are there any concerns about this being an asian bidder or is it simply about pricing in your view? >> i think it's just a question
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of pricing. i think initially some of the asian investors there was a bit of a concern, but i think it's two to three quarters of due diligence for such an acquisition is considered normal. so i don't think it's asian investor causing the concern. >> and you expect when we look down the line that this will go forward? >> i don't see a big challenge especially with hutchinson. and we know the partnership with them. we know their open pricing. so that gives a big push that he will they'll be looking at stable prices moving forward. >> okay. thanks very much. now, a quick look at what's on the agenda in asia tomorrow. the bank of thailand is expected to leave its policy rate on hold following the quarter percentage point cut it made last month. also third quarter gdp data from
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the philippines and earnings season will ten with reports from china gas and mongolia investment. stay with us now because still to come on the show, we'll take a look at how columbian artist montoya is making a statement when money with money.
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we have auction results from spain which has managed to raise more than it needed in an auction of treasury bills. 4.09 billion euros total. that's in t-bills with a range of i believe since months and three months. bid to cover is a little bit weaker on the three month. stronger on the six month. the yield on the three month coming in at 1.254%. and for the six month, about 1.7%. both of those a little bit of an improvement versus last tile around. you can see with the exception of the three year spanish bonds are rallying across the curve there, so the two year now pinned at just over 3%. the ten year at 5.6% and again spain raising more than expected or than at least it had planned in an auction of short term debt. fitch isle also out talking about how cat take loan i can't will need more central government liquidity support. the timing of course interesting given the relationship between
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catalonia and the rest of the spanish sovereign. and fitch does know that the the tense relationship between central and regional governments in catalonia coulds to say the . also new one year bond will be -- sorry, the three years, we're now seeing a one year wnd going forward. still with the financial sector vilified with the public at large, the value of money and its political consequences are the focus of a new art exhibition in london called the great swindle. works composed of material such as bank notes and food coupons are being exhibited by santiago notice t montoya. ross went to take a look. >> reporter: this piece of art is called money talks. it has chinese notes facing
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west, dollar bills with george washington facing east. it's part of the collection by santiago montoya who uses nothing but current city notes and stamps k3 flooring the relationship between money, politics, people and power. >> is it about china, is it about the u.s., is it about, you know, one system or the other. but what is it really that we're dealing with. >> reporter: that theme is explored further in this picture, the dollar bills with chinese yuan spelling out sos. who needs who the most. santiago started using currency before the financial crisis but now has a rich canvas to work with, which hopes will pull in the crowds. >> there isn't anywhere in the world that isn't touched by this current situation and the discussion about banking and money and finance and debt and whether we want to stay in the euro, don't want to stay in the euro. >> reporter: other works include you this fish and ships
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reflecting the perhaps fragility of trade before ever wanted to know just how much space one billion bucks takes up? this block of paper is a million dollars recycled. and look closely. george washington or perhaps bernie madoff on that dollar bill. >> they look so similar. the fear of many in the whorld what is going to happen with the euro and the dollar. i mean, is it going to be sort of like a ponzi scheme. >> reporter: this collection is called the great swindle. and it suggests not only the circularity of history, but also perhaps a comment on the future of the euro. witness this 200-year-old greek bank note with french words on top. but considering all the money on display, this is quite an affordable collection for modern art. >> it's very reasonable. we've kept it that way very purposefully. a few thousand pounds up to sort of 75,000 pounds.
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>> reporter: and it's not so much about making a statement, but santiago is asking a lot of thought-bre thought-provoking questions. >> fascinating. we're thrilled to on welcome santiago now with us here to the studio. great to have you in. >> great to be here. p. >> and what reaction has been there from people as they're seeing the artwork and are there bids, are they buying the stuff? >> they are. apart from buying, it's about buying the idea. it's about letting themselves get involved with the work and having something happening between themselves. as you were just watching, it's not about just bringing a statement. it's how we debate and think about the things that are happening beyond just what you you usually see on the surface. >> as a columbian, smuf experience with currency crises. is that how you you got interested in the topic? why is it what's happening with the u.s. and european union or eurozone and china has caught
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your attention? >> because it's part of our daily life. and we have a meeting point with money more than anything. horn religion. doesn't matter what religion or country you come from. what we are living now today, we're starting to think about is it really 100 dollars and what does it mean, what is its value. we know the cost of things, but what is really the value that water trying to get an agreement on. >> you sound like a card carrying member of the u.s. tea party. this is the message which has spurred actually a lot of -- has spurred political movements to some extent. >> yes, well, hopefully when people go into the exhibition they will take home something to think about because we need to
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have a great debate about what is coming in the future. i mean, hundreds of years ago, it was porcelain, silver, gold. but now it is the money. and now right here in the studio, i'm looking at these numbers and the words and what do they really mean? do we know what's going on? i see zeros on the left, on the right, they come up, they go up and down. but at some stage and i've heard this from even bankers that have been in the exhibition telling me i need to have my people, the people that work with me, to go and see the stuff that we're trading with. because otherwise if you lose touch with reality, then it's very easy to all of a sudden say what the hell went wrong. >> and is that the effect you're going for, which is almost by putting it in front of people in a slightly different way to make them call into question the very basis of what it is that they're doing with money? >> it's unbelievable how often you hear people telling you i
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had never looked into a bank note. i've never actually taken the time to see what is in it. and from today onwards, it is really going to be a different thing for me. j th >> the way things are going by electronic payments, cash is almost becoming outmoded. >> i don't know. that's one of the things that people have told me, but they say, well, you you go around with a credit card. i can't, but when i get back to my country in columbia, i do have to take the currency around. so it's the same thing about asking yourself are we going to lose touch with the book, with the pages, is it going to be a kindle from now onwards? i don't think so. and the fact is more time goes by, people are interested in feeling something. we can imagine and do all these transactions, internet and -- i mean, people, we still have our senses. there's something we won't lose at any point.
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so we want to see the material. hopefully a lot of us do want to keep that touch with reality. >> and you you are working on something specific for europe's debt crisis? that might be the next thing that we see from you? >> we'll see. yeah, there are a lot of interesting things coming. >> how much does it cost to acquire one these pieces? >> i usual don't know that. the big question is it important to acquire the work. i mean, i remember seeing the black painting and i won't forget that. some people can afford it and that's great, but in the end, that's what keeps the artist working on their work. we've had thousands that go out
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and -- the fact is they can go if a month or more than that and enjoy the work and something happens in their life. so the big question again coming back it to the idea of value, did we really need to have them. yeah for yeah, for some people it is, and it motivates the artist to keep pushing and doing new work. just the fact of being able to go there and go something to debate in your world or with others, that's a great achievement. >> thanks very much for coming by in our studio and for letting our cameras take a look at it. santa i can a couple or stories we're watching, argentina's government is appealing a u.s. court order to pay $1.3 billion to investors tied to the country's 2002 sovereign debt default. last week the judge said argentina had until mid debt to
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pay the hold out creditors. argentina calls the ruling unjust saying it could wreck future attempts by governments to restructure debt. and bank of canada give mark carney says he's honored to accept the role as head of the bank of england. george osbourne made the announcement in parliament describing carney as the, quote, outstanding central banker of his generation. >> i can tell parliament and the public that the next governor of the bank of england is to be mark carney. he is currently governor of the central bank of canada and chair of the world's financial stability board. he is quite simply the best most experienced and most qualified person in the world to be the next governor of the bank of england. >> high praise there. carney will serve a five year term and he's admitted there is plenty of work to do when he replaces mervyn king. >> this is a major challenge, a
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major opportunity, very important it for the global economy that the uk does well, that it succeeds in this rebalancing of their economy, that the reform of the british financial system is completed, well advanced, but needs to be completed. >> earlier we asked what you thought of mark carney being appointed, who you you you might have tapped for the job. and jeff tweets in to say daniel craig. no finance expert, but knows how to save england in any crisis. don't mess with him. well, if you want to continue to keep the thoughts coming, join the conversation. worldwide@cnbc.c, @cnbcwex. still to come, eurozone finance ministers are buying greece time. i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on grouning at fedex office.
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welcome back to the program. european markets cheer a ground breaking deal for greece. enter national lenders agree to reduce the country's debt levels, cut interest rates and extend the maturity of existing len loans. third quarter gdp data show the country's out of recession as output is confirmed at 1%. and all bets are off. prediction market entrade says it can no longer accept u.s. customers as market regulators say it trades are not legal. and point, click, buy. americans were doing plenty of that yesterday as early reports
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suggested online holiday sales soared on cyber monday. ross westgate is under the weather this morning. mervyn king will be delivering the economic report and we'll bring that to you shortly. the oecd is out with its economic outlook and its warning about extra austerity measures in spain. it sees developed economies growing 2.3% in 2014, it has cut its 2013 growth forecast for developed economies and quite significantly to 1.4% from 2.2% prior to that, it sees contractions next year for greece, hungary, italy, portugal, slovenia and spain. now, it's also -- that's 316 its
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34 members. it expects the eurozone economy broadly speaking to contract by 0.1% next year. and it calls for additional machine taker po monetary policy. so taking a much more dovish stance both with regards to budgets and monetary policy than some of its counterparts. now a quick look at how markets are doing this morning. check on u.s. futures which are trying to add about eight points, five taking fair value into account. s&p at that 1404 level this morning. now take a look at asian markets. overnight, the big eye opener was the shanghai comes positive it. down 1.3% and closing below 2,000 for the first time since 2009. more comments out of japan about potential easing.
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european markets are valleying on the greek deal agreed to in the late hours of last nigh nightrallyinight.rallying on the greek deal agreed to in the late hours of last night. we're seeing more differentiation. italy has seen its yield creep a little higher. the ten year in the u.s., 1.65. in the u.s. today, october durable goods are out at 8:30 a.m. eastern. and demand for big ticket items is expected to drop 1.2% with some impact potentially from hurricane sandy.
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case shirl index. home prices expected to raise about 3% in september. and at 10:00, november consumer confidence. analysts expect a reading of 73 can would be up a point from last month. dallas fed president richard fisher and atlanta fed president deny this lockhart are both speaking in berlin. richard fisher expressing concern that the size of the monetary policy easing in the u.s. is abnormally large. of course you might argue the abnormal conditions warrant that. never the the less, we'll also look at earnings from adt and green blount continmountain. the greek deal is done. athens will receive its much needed bailout cash.
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>> our common goal is that greece achieve a credible and sustainable reduction reaching lower than 110% of gdp in 2022. we will consider further measures if necessary to achi e achieve. >> one of the key points, silvia is back with us from brussels. good morning. and there are so many points. which are the most significant? >> well, we knew there was a sort of all combo of com poe neds there n. there because the euro group had agreed in principal to some kind of game plan and the key end was getting the imf on board.
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in exchange, one must almost say, the ef got the following. there is a ten year moratorium on interest rates. a lowering of interest rates on the existing debt of 100 basis points. a lot more than speculated about. there is an extension of maturities of 15 years for the existing debt. and of course the other component in there that would trigger all these measures is greek government will embark on on a debt buy back program. we haven't quite heard about what volume that is to take. just the sentence in there quees has intention of buying back debt and when that happens, if and when that happens, all these other little things will fall into place. so a little if element in there. then of course the euro group
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can sign up on the next tranche. it should happen by december 13th. that is the next eu summit temperatu. then greece would get the first 31.4 billion of the total 44 billion tranche and the rest of the 10 billion would be handed out in stages in the first quarter if and when greece get the next bids on track, most notably of course tax reform in january. of course the german parliament also has to vote. this will happen on thursday and some other parliaments have to give their approval, too. but that was a great sigh of relief. everybody breathe. and of course the biggest sigh of relief came from the greek finance minister. here's what he said. >> it will help greece because it keeps it in the euro.
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we avoid insolvency. so now we have time to think more positively about growth, about also how to implement the decisions we've taken. >> so of course say this is more kicking the can down the road, it doesn't change anything. the one thing that i can say from this point at least it is a kind of debt reprofile williing has the chance of working. has a chance of getting it right. but when has it play along is the economy and the capital flows that have to start flowing back into the eurozone and of course especially flowing back into the southern countries and into greece. there are some signs that this has already been happening over the past few would he bes, but it is on very fragile ground right now and of course if the eurozone economy turns sour gasoline are or if we really fall off a cliff, then this could all evaporate very
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quickly. but at the moment, it should to a bit more than buy us time. it could actually put things on a more level footing. could. >> i was going to say, that's the most optimistic i've heard you in weeks saying potentially could work. but we're getting reports that the german vote will happen on the 29th. is there any reason to expect major intransigence? >> no, i don't think so. it will be a little bit of a battle between angela merkel's challenger, yyou but that and h more a domestic gallery. in any case, the opposition is i said will the rescue packages, so they can't say we aren't going to play along. you think what the opposition is pushing forward is saying we conditions just keep saving the banks. there has to be a tighter rain on the banking sector. i think we'll hear a lot about
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that. but iltly the vote will go through. >> all right. our political analyst in brussels. silvia, thanks very much. we want to on get more on this now from christian schultz. welcome. aren't we all political analysts now? >> management especially is a lot about politics, but there's also underlying economic reforms taking place. there is also economics happening, but clearly political risk is the biggest thing. p. >> people are pointing to balance, saying they're making progress, they might even be in a spain's position which is what happens when you significantly lower your unit labor cost. but are these measures ultimately going to result in better competitiveness or are they just doing more damage to
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the economy? >> export is the final yardstick of competitiveness. if you can sell your goods, you're somehow competitive and competitiveness is not just about costs p abo. it's also about brands and marketing. if countries can sell their goods on the global markets, they must somehow be competitive and these swings is not just import reductions, also export growth, show there is is competitiveness coming. and if you look at unit labor costs, clearly there is a rebalancing going on. germany had been gaining competitiveness on that measure before the lehman crisis, it's losing competitiveness now and other countries such as greece, ireland, have reversed their position the other way around. so there is a lot of progress under all the noise. >> so even if we've lowered the odds of greece leaving the eurozone, it feels like, great, now what. they still have enormous debt to
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gdp level. and fundamentally about competitiveness and what the greek economy will be able to do going forward. spain at least you can look at about prts. i'm not sure if greece is in such a strong position. >> back in summer all of us were thinking that we were very close to the euro exit. so in that sense we've made progress. it looks less likely now that greece would leave the euro, but clearly the country still has a lot to do to really sustainably stay. and i think what we've seen today or yesterday is not a once for all solution. there is still that mistrust that greece really does adjustment so they haven't done the restructuring because they think, you know, we have to still push and get the country
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through the reforms. >> and it expects the eurozone economy to shrink by about a tenth of a percent next year. that sounds optimistic frankly. >> i don't know. what the eurozone does next year depends on two things. one is what happens in the core countries such as germany. if there is a rebound, it looks pessimist pessimistic. and the other is the crisis countries which have probability seen the peak of austerity this year. italy has its fiscal balance already completed. it's done its fiscal repair. that could be enough to see a turn around in growth there. we have italy and germfully growing, that's almost half of the eurozone already. >> i notice you haven't mentioned france. >> it has a lot of competitiveness problems and hasn't really done anything about it. in fact over the summer they've done things to reverse previous
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efforts to improve the situation. they've done a little about labor market reform. there's a lot to do still and i don't think france will be growing very quickly next year. >> okay. christian schultz, walking us through the whole map there. very much appreciate it this morning. stick around. congress has put away the turkey and pumpkin pie and will get back to work with the fiscal cliff. so can a deal actually be struck before christmas? can i help you?
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i heard you guys can ship ground for less than the ups store. that's right. i've learned the only way to get a holiday deal is to camp out. you know we've been open all night. is this a trick to get my spot? [ male announcer ] break from the holiday stress. save on ground shipping at fedex office.
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it's deal. markets rally as policymakers reach agreement on cutting greek debt. and let's tnot twist again. richard fisher says asset purchases should end this december. and third quarter gdp data defies predictions with growth confirmed at 1%. also results out of italy. spain was able to raise more than expected in three and six month bills. italy has completed a two year zero coupon bond auction with the yield at its lowest since october 2010. that isn't turning its bond yield on the longer end. ten year back into the green. this morning we've seen it flip
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price higher, yields -- i'm sorry, price lower, yields rising. but just to reiterate, italy going to market on its would ye year. yield 1.9 versus almost 2.4% when it last -- same one back in october. and mervyn king's comments about his successor, mark carney. king has said the bank of england is thin good hands, completely confident is what he's saying on that front. he also by the way in terms of the outlook sees a slow recovery with inflation above are target. so the future will look much like the recent past. we'll continue to bring you those comments as we get them. now, the white house says
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president obama called john boehner and harry reid this weekend on efforts to avoid the fiscal cliff. the "washington post" reports boehner plans to have some house republicans meet with erskine bowles. so what's it all mean? paul dale joins us for more. are you very concerned, not at all concerned? >> a little bit concerned. there's still a good chance we'll reach a deal before the end of the year. a deal whether be done to overt the fiscal cliff. the tricky part is the second part of the deal. averting the cliff is relatively easy. the second part is putting in place a medium term plan to really soft problems. >> of course especially with the dell ceiling looming, in your
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view, does it matter whether the deal is reached through spending cuts or tax increases? >> from an economic point of view, no. i just want to see that deficit can down to something that's much more stable. at the moment, in the cliff is averted, u.s. debt could spiral up towards 90% of gdp, which would bring around some problems. we want to see as an economist the budget balance really. in terms of a split between revenues and government spending cuts, aim fairly neutral. i just want to see something done. >> something done near term and longer term. we'll also talk about the consumer outlook in a second. paul will stay with us. still to come on the show, u.p.s. will be very busy this holiday season delivering as many as 300 passengers per second as we approach christmas. the company put drivers through the paces to be ready for just about any situation. we'll go to u.p.s. boot camp
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on cyber monday, sales were
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up 28% from the same day a year earlier. and all those online purchases have to be delivered by someone. u.p.s. has designed a new way to train it employees. kristen dahlgren gives us a rare inside look. >> reporter: as christmas approaches, u.p.s. will deliver 300 packages a second. a blitz of boxes that begins with boot camp. basic training the way a new generation learns. hands on. trainees are observed at every step learning methods for everything from driving to stacking packages. but one of the most important things they learn is that every second counts. >> seconds add up very rapidly into hours. excellent. 17 and a quarter seconds. >> reporter: it's as real as they can make it. >> we fill them with cinder blocks and bricks. >> reporter: and it's not easy.
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as i found out on the slip and falls track. supposed to teach drivers how to navigate an icy sidewalk. >> just small steps so you feel like you're this control. >> reporter: in the one week course, drivers learn multitasking efficiency, turning the key with one hand, seat belt with the other. and most important, safety. u.p.s. works with schools like m.i.t. and virginia tech to design the simulations showing drivers how to avoid stress on joints and reduce injuries. could you have learned all this in a sclas room by a book? >> no way. >> definitely costs more, but the return on our investment is really been shown. >> reporter: it's worked so well, u.p.s. now has two facilities and other companies use brown boot camp as a model. it's not for everyone. but that means the drivers who do make it through are more than ready for the holiday rush.
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krist chr kristen you tod kristen dahlgren, nbc news. >> i'm surprised they have to go to that extent, but it makes sense. sgle . >> every second counts. cyber shopping is so important. does it change at all the nature of holiday sales or is the point really just how much consumers are spending, period? >> there seems to be some structural shifts. it seems sales are starting earlier every year, creeping in to thanksgiving and more is being done online. this is very important for each retailer and equity analysts, but from a macroeconomic point of view, it's not actually that relevant. there is very little relationship between what happens on black friday or cyber monday and how the whole holiday shopping season goes. it's a myth that if it's good black friday, you get a great holiday season. but that isn't actually the case and arguably it goes the other way p i think that what happens
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is households have a fixed set amount of cash, either they spend it on black friday or they spend is later in the holiday shopping season. >> are you suggesting that the strong black friday cyber monday sales would he have seen are maybe a warning sign for later in the season? >> that's certainly what history suggests if you look at the data, yes. and that would also sit comfortably perhaps people get a bit more concerned about after tax incomes with the fiscal cliff we'll hit. so there's a few things that could add up there that means perhaps the outlook for consumers isn't quite as good as the recent data suggested. >> i've seen different industry estimates. what is your own view on how the holiday season will shape up? >> i think our tag line is that it's not going to be a disaster by any means, but nor is it going to be a cracker. something in between where households really spend around the current rate. and that's growth or consumption of around 2%. i suspect that will continue through the holiday season. >> and i understand the cracker reference now that eve bei've b
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here in london for money months. paul, stick around. interesting point about whether the sales are robbing from strength later in the season. also still to come, we'll take a look at housing. it does look set for a sustained rye bound after years of depressed activity, but is the recovery for real? we'll discuss you as we preview the latest s&p case shiller index.
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european markets cheer a deal it for greece, reducing the debt levels, cut interest rates and extend maturity of existing loans. and let's not twist again. richard fisher says asset purchases should end next month and he doubts the program's efficacy. good news for mark carney. third quarter gdp figures show the uk grew more than expected or at least outfit was confirmed in the third quarter at 1%. and all bets are off. entrade says it can no longer accept u.s. customers as market regulators say its trades are not legal.
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let's take a quick look at how markets are trading. a mixed picture. the dow in negative territory looking to shed about six points at the open. the nasdaq is trying to open higher although if you take fair value into account, it should be in the red, as well. take a look at the ftse cnbc global 300. still up a tenth of a percent. let's zero in on the bourses to get a sense of what's happening. we did start the day off with rallies that were stronger than what we're seeing now. giving up some of these gains. ftse 100 up 0.4%. xetra dax half a percent. sp spain and paris in green. greek almost down 2% with greek bank stocks leading the way lower. dallas fisher said the u.s. central bank must set limits on its monetary policy. the hawkish fisher warned the size of the fed asset purchase program is abnormal saying he
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opposes an extension of operation twist. the latest s&p case shiller index due later today is expected to show continued improvement for home prices in 20 major u.s. cities. providing further evidence of a long term rebound for the sector or sdw does it. our next guest is eric glean, chief of u.s. rates research and strategy at td securities. paul dale is also still with us. eric, good morning. first to you. tell us why you're concerned the housing recovery might not be for real. >> well, we have seen fits and starts in this recovery. i do think it is for really. we won't be seeing an upward move, but there are encouraging signs. we're seeing home prices improve across most regions of the company. inventories on a monthly basis
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are half of what they were two or three years ago. and when you think about do i want to buy a house or not, you want to see home prices at least stabilize. i think you're seeing the elements of a sustained recovery. not a great recovery, but what we need here is to avoid a negative outcome and i'm pretty confident at that point that we have achieved that. >> what are the biggest hurdles? >> household formation is extremely critical to housing demand. we've got an nice bounce off the lows. so what i need to see a job growth. job growth is everything in this
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recovery. that's not new news. but when you think of housing, you can't get a mortgage unless you have a job. so you really need to see job growth in the 200,000 range to be consistent going forward to make sure the housing market does not slip a notch lower. we also have the fiscal cliff looming ahead of us. if we don't do anything, a 4% hit to growth from a drop p in government spending and taxes does not work well in an economy that is growing at 2%. so i know it risks stating the obvious, but one of the biggest risks right now is dysfunction in washington, not getting some sort of deal done to smooth out the spending issue next year. >> paul, what's your take on housing? is the recovery for real? >> yes, it is. i called the housing recovery about a year ago and certainly the lasts six months it's really started to gather a head of
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steam. like eric, i don't think it will turn into a fantastic recovery, but i think it will continue and perhaps surprise people on the up side over the next six months, 12 months. >> one of the interesting points is the fact that the recovery in house an autos has been so strong this year and yet we still don't have great gdp growth. >> that's partly due to events overseas. are you getting these improvements in the domestic sectors, but we still have a huge amount of uncertainty in europe and asia, as well. and so if those issues weren't previous rent prevalent, i think the u.s. which i would be doing better. but i'm getting more opt miss tech because these headwinds are turning in to tail winds. >> you're sounding bullish. >> i won't go that far. i'm sounding less bearish. >> eric, what about you? if this recovery isn't knocked off track, what does that imply for the ten year when we start to look in to next year and
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beyond? >> i've given up a long timing a go trying to figure out the ten year interest rate. i do know this, that the fed will continue to buy, that this economy pretty much if you assume a drag next year of 1.5% of gdp, a stronger private economy, you're still looking at growth around 2%. so no seismic shift higher. but the real key thing here i think is that when you're looking at the levels, rates that are negative in real terms by about minus 90 basis points, do we get a negative outcome or not? from where i sit, i think that you are going to see one of the boones that we have typically seen in other recoveries, construction jobs. it's been positively heroic that we've been able to create the sort of jobs that we have without construction, without finance, and no jobs in government. you'll get a turn in jobs in the construction center. in terms of housing investment, in terms of gdp, you won't get a
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big boon in housing investment, but it will add instead of detract to growth. so the way i look at the ten year rate, the fed wants higher inflation, they'll get it. we're not going to have a negative outcome. we're not going to have a great outcome, but we'll be around 2%, possibly higher towards the end of next year. and from where i sit, a ten year rate of 1.6%, i wouldn't want it p. >> okay. eric green, chief of u.s. rates research and strategy at td securities. paul dale, thanks for your time, as well. can i ask are u.s. home prices going to be higher or lower at the end of next year? >> higher by about 5%. it's a good recovery. >> okay. we'll call him back and see if that pans out. now let's take a quick look at live pictures from westminster. bank of england governor sir mervyn king and colleagues are giving evidence on the bank's november inflation report to parliament's treasury select
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committee. he's selling lawmakers any recovery will be slow and protracted and that asset purchases will continue if the bank considers them necessary. the bank of england governor also has admitted that they should have ruled out the chance of strong recovery sooner than they actually did. he's also thrown his support behind canada's mark carney who will be his successor when mervyn king retires in july. stick around, because still to come, france's industrial minister sa minister tells he's in longer welcome in the country. who will win the battle of wills? having you ship my gifts couldn't be easier. well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer. oh...sorry about that. [ male announcer ] break from the holiday stress. fedex office.
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♪ the lexus december to remember sales event is on, offering some of our best values of the year. this is the pursuit of perfection. these are your headlines. it's a deal. markets rally as policymakers reach agreement on cutti greek debt. richard fisher says the fed should end asset purchases in will december. and uk third quarter gdp data defies predictions with growth confirmed at 1%. some other stories we're watching this morning, entrade is telling u.s. customers they must close accounts by december 31st. the move comes hours after the
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trading commission filed charges against the irish company. it says entrade has illegally facilitated bets on future economic data, gold prices and acts of war. the agency says those are options and so they can only be traded on approved and regulated exchanges. also lehman brothers has struck a deal to sell u.s. apartment giant archstone to rival landlords for $6.2 billion. archstone owns some 145,000 apartment units and the sale close as rocky five year chapter for lehman which took the company private in 2007. auditors now say archstone was a major contribute toor to lehman demise in 2008. and a bitter dispute over plans to close two furnaces in
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northeastern france. a meeting comes a day after the industry minister declared he was no longer welcome in france. for more, stefane joins us now from paris. can you just remind people who might have missed this just what war of words has been exchanged? >> it's a long story because when sarkozy was in pow every, he wanted to shut down the two furnaces, but extended the deadline and you now that he's planning to shut down the two furnaces, the tensions have reached a new level. yesterday the industry ministry said clearly that he was no longer welcome in france because of years of broken promises with the government. he tried to minimize his
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statement. he wrote that they will continue to operate in france. there are more than 100 industrial sites and employs more than 20,000 people in the country. the steel maker recently said that it would shut down the two furnaces in the northeast of france unless the government finds a buyer to operate them. the deadline was set december the 1st and that's probably what will be discussed today probably to extend the deadline to find potential buyers for the industrial activity. one of the most left wing minister of the socialist government, not the first time he has an open clash. some weeks ago he had a clash
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with the management of a company when it wanted to fire 8,000 people in the country. >> stefane, it raises questions about how france will attract global businesses that it badly needs at a time when it's perceived as interfering with their plans every step of the way. >> that is a problem of communication for sure between the minister and the business community. the french finance minister has the opposite attitude, he's trying to build a relationship between the socialist government and investors and ceos in france. on the tother hand, if you leav aside the communication, the tax and cost of labor is also a problem. recently the government announced a plan to lower the ks
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of labor in the country. experts claim it's the not going to be enough to significantly lower the cost of labor in the country. the other problem is the plan to implement a 75% tax on income higher than 1 million euros per year. it's a temporary measure but for sure not going to attract foreign investors in france. definitely not in this context. >> all right, stefane, thanks very much. of course london's mayor johnson taking advantage of the situation saying i have no hesitation in saying here, at a beating of business leaders, [ speaking french ] basically saying come to london, my friends, we'll have you if the french won't. moving on, the greek debt deal is done. late last night, eurozone finance ministers and the imf
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agreed terms that will see athens receive its much needed bailout cash. >> our common goal is that greece achieve credible and sustainable reduction reaching a level substantially lower than 110% of gdp in 2022. we will consider further measures if necessary. >> initial market reaction was positive. greek bank stocks have fallen sharply this morning and you can see here the detail. this amid fears that the debt buy back plan will erode bank's capital base. of course it all becomes very circular when we start talking about holdings of greek debt which will be affected by the details agreed to last night. efg euro bank down more than 11%.
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have extraordinary. declines at session lows. certainly one to keep an eye on. we'll see if it does weigh further on european equity which is are still broadly speaking in the green this morning. u.s. markets are taking a step back as investors eye on going budget talks in washington. so will the fiscal cliff storm clouds continue to overshadow positive economic data? we'll preview the trading day in the u.s. next.
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european bourses still in the green this morning. ftse adding a third of a percent
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after third quarter gdp confirmed at 1% growth. cac 40, ibex stills positive, although they've certainly come off their highest points of the trading session this morning. quick look at the agenda in the u.s. october durable goods, the home price index from case shiller, november consumer confidence expected to uptick. richard fisher is speaking this morning and did dennis lockhart will join him. those comments from berlin. u.s. futures are looking a little bit softer. we're seeing the dow, nasdaq and s&p 500 if you take fair value into account pointed to open lower this morning. for more let's get out to hank smith, chief investment officer. hank, good more thning. are you surprised there is no
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more optimism in futures? >> no, not really. because here in the united states, it's all about the fiscal cliff and very interesting last week as congress was on recess on vacation, the markets were you up. you now that congress is back in seg, there's a lot of jitteriness and i think you'll continue to see this until there is a resolution at least until we see that the fiscal cliff is being averted, either with a bridge or something more comprehensive and permanent, which is highly doubtful in a lame duck congress. >> for example the durable goods orders, we've seen a fall off in investment. is that owed to this uncertainty over the fiscal cliff? >> absolutely. capital spending is on strike here in the united states and has been for a while. but the good news is 2013 should be the year that certainty replaces uncertainty. unleashing a lot of pept up
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demand. so we can make the case that we'll see an acceleration of gdp growth with this unleashing of pent up demand in 2013. >> you have a price target yet for the end of next year? >> well, no. we think that we'll probably come in in year somewhere with the s&p up 10%, 12%. and i think we could very well do that next year. particularly if we get that acceleration in the back half of gdp, maybe gain up to 3%, 3.5%. >> special differenvidends have at a healthy pace lately. if companies are using cash for these payouts, is that ultimately in your view a reason why in-s investor shoes buy into the market or a reason to be
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cautious? >> for companies who have large concentration of owners, it makes sense to pay that special difference denied pl reality is dividend taxation is going pup the question is to what extent. if it moves in line with capital gains say there 15% to 20% plus the 3.8% obamacare surcharge, i think that's a very positive result as opposed to going back to the stop marginal rate. >> i find it hard to believe that u.s. markets don't care about europe the at all. certainly we were just talking this morning about the september to which that has weighed both on real growth and market performance over the past 12 months if not longer. so how is it possible that if we get finally some resolution on that front into next year we're not again sort of seeing that play out in markets this
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morning? >> well, i think it's an overstatement to say europe does not matter. of course it matters. but the trend it in europe is gradually getting better. and also i think the sloe do slowdown in growth, we're getting past that. so 2013 could shape up to be a year much stronger globally and in the united states than many economists are expecting at this point. >> shocked if certainty does replace uncertainty, but relieved. hank smith, thanks for your time this morning. that will do it for us. i'm kelly evans. than thanks for tuning in pup. up next, u.s. squawk box.
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you're pea an stocks trading higher after greece agreed to new debt targets with international creditors. in the u.s. today, key readses on manufacturing, housing and the consumer. plus the looming fiscal cliff as talks continue on capitol hill. president obama prepares to meet with another group of ceos, it's november 27th, 2012, "squawk box" begins right now. good morning. welcome to "squawk box." i'm becky quick along with joe


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